Mixology: Accounting, Finance and Data 

  • OCTOBER 19, 2018

If you run a business, you are almost perpetually consumed with thoughts about how to grow.  After all, growth is one of the fundamental axioms of business management.

So here’s a novel idea: fire the back office accountants, and re-invest in sales, marketing and product!  Then maybe I’ll grow faster.  Simple, problem solved.  Right?

But, then you remember.  The IRS comes knocking if you fail to prepare an annual tax return and retain a set of documents that can be audited.  That’s a bummer.  And, because you needed that bank note two years ago, your lender has insisted on these ridiculous artifacts called ‘GAAP financials.’  So you sigh, and think, “So much for that idea.”

Thus, your accountants sally forth, preparing financial artifacts and filings, and preparing for audits that satisfy regulatory, tax authority and lender inquisitions.  That’s a fair amount of back office costs that won’t help your sales, marketing and product teams excel.

Finance to the Rescue.  Maybe.

But, you don’t give up that easily, do you?  You return to the fundamental axiom of growth: investment into your future prosperity cannot be sacrificed.  So, you bite the bullet, pull back on other initiatives and begin to build a finance team.  It begins with one analyst, who analyzes and reports on financial and non-financial performance.

That analyst taps out rather quickly however, because they don’t have immediate access to data.  Clean, well-architected and vetted data, that is.  So, that analyst spends 85% of their time just gathering and cleaning data, and the rest cobbling together some type of insightful analysis.  You quickly surmise that you’ll need 10 analysts (plus a director to manage them) to get any kind of meaningful results from this investment.  This quickly becomes a non-tenable scenario.

Conjuring Steven Covey

Most of us have read Steven Covey’s, The 7 Habits of Highly Effective People.  If you haven’t, or it’s been a while, here’s a quick refresher.  Covey was an American businessman, author and orator.  He published several profoundly impactful books, most notably The 7 Habits of Highly Effective People in 1989, reaching 25+ million copies sold.  In that book, one primary theme centered on building synergistic relationships, specifically how dependent and independent people must transcend their own styles and behaviors to create interdependent relationships.  Covey wrote:

“Dependent people need others to get what they want. Independent people can get what they want through their own effort. Interdependent people combine their own efforts with the efforts of others to achieve their greatest success”

While many people tend to apply Covey’s concepts literally (that is, to their personal relationships with other people), there are obvious manifestations of this throughout our world.  This includes nature, economics and business productivity, to name a few.

Mixology and Synergy

So, let’s return to the problem we started with.  You need to grow your business (like right now), but resources are constrained by the need to comply with regulatory and /or tax authorities.  You know you need to hire analysts to drive internal reporting, but the accountants must come first: they are a requirement, not a choice.

There is a synergistic opportunity here.  What if your accountants could create well-architected and vetted datasets within the course of their day-to-day functions?  That is, while on their way to preparing GAAP financials and tax filings, they proactively left behind organized (relational) data that the analyst could grab with ease?  Then, the analyst could organize the data in 15% of their time, leaving 85% to analyze, report and recommend.


The challenges to this concept are not difficult to overcome.  Accountants, by nature, are rule followers.  They don’t need to become financial analysts themselves; note that they are already data merchants.  They just need someone to tell them how to process and store transactions and journal entries in a way that creates the interdependent relationship with finance.  It’s simply a data management paradigm change that yields downstream synergies for the rest of the organization.

In fact, putting data management first makes a whole lot of sense.  Good, accessible data facilitates good communication.  And feedback loops.  And management initiatives.  And presentations.  And, of course, GAAP financials and tax filings.

Putting data first fuels Covey’s notion of interdependence, an ‘upward spiral.’  The organization works together to ‘know thy business’ from a common platform of goals, metrics and results.  Accountants can use this granular-level, shared understanding of specific activities that might lead to eventual tax savings.  In this Financial Executives International tax strategy blog in 2016,

“Tax executives are now chartered with not only achieving tax compliance, but also providing sophisticated tax planning capabilities that will help meet their company’s overall financial goals….As a result, tax data analytics, which is the foundational underpinning of successful tax planning, is now a top priority for many leading companies.  However, without a feasible plan….tax teams will continue to be stuck in the minutia of data entry.  Those companies that are implementing best practices today and exploring new processes and automation techniques for achieving the “holy grail” of clean data, will be in the best position to deliver on tax planning requirements now and in the future.”

And this is just tax.  The concept can be applied holistically across multiple business functions.

So, approach the conundrum of constrained resources from a synergistic frame of mind.  Acknowledge that better data management can engender both analytic insights as well as support GAAP reporting and regulatory compliance.  And get yourself a copy of The 7 Habits of Highly Effective People while you’re at it.

The Calculation Bar is an organization driven to creatively transform corporate finance through compelling data visualization, technology and responsive customer service.  Our goal is to optimize how business leaders use data effectively, improve financial performance and engender deeper conversations with lenders and investors.  For more information, please visit calculationbar.com.

Your browser is out-of-date!

Update your browser to view this website correctly.Update my browser now